Cost-effective unilateral climate policy design: Size Matters

Christoph Böhringer, Carolyn Fischer and Knut Einar Rosendahl

Discussion Papers from Statistics Norway, Research Department

Abstract: Given the bleak prospects for a global agreement on mitigating climate change, pressure for unilateral abatement is increasing. A major challenge is emissions leakage. Border carbon adjustments and output-based allocation of emissions allowances can increase effectiveness of unilateral action but introduce distortions of their own. We assess antileakage measures as a function of abatement coalition size. We first develop a partial equilibrium analytical framework to see how these instruments affect emissions within and outside the coalition. We then employ a computable general equilibrium model of international trade and energy use to assess the strategies as the coalition grows. We find that full border adjustments rank first in global cost-effectiveness, followed by import tariffs and output-based rebates. The differences across measures and their overall appeal decline as the abatement coalition grows. In terms of cost, the coalition countries prefer border carbon adjustments; countries outside the coalition prefer output-based rebates.

Keywords: emissions leakage; border carbon adjustments; output-based allocation (search for similar items in EconPapers)
JEL-codes: D61 H2 Q2 Q43 (search for similar items in EconPapers)
Date: 2011-09
New Economics Papers: this item is included in nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Related works:
Journal Article: Cost-effective unilateral climate policy design: Size matters (2014)
Working Paper: Cost-Effective Unilateral Climate Policy Design: Size Matters (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ssb:dispap:664

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